Impact on NMW - Buying & Selling Holidays

Thrugelmir

kimwp said:

NMW is an hourly rate. Presumably the holidays are bought at the same hourly rate as the employee is paid - if so, then the employee's wage per hour will be unchanged if they buy holiday. They will be paid less, but will work fewer hours.

In effect unpaid leave. Only difference being that it's a contractual benefit that's on offer to the employer by allowing them to buy holiday. Rather than being discretionary. 

kimwp

kimwp said:

NMW is an hourly rate. Presumably the holidays are bought at the same hourly rate as the employee is paid - if so, then the employee's wage per hour will be unchanged if they buy holiday. They will be paid less, but will work fewer hours.

Having said this, if you have influence over wages, it would be great if you could consider paying your employees a living wage rather than the legal minimum. (Obviously this might already be achieved if you are in an area where living costs are lower)

Savvy_Sue

Did a webinar on NMW recently. Buying extra holiday which reduces your salary below NMW - not allowed.

kimwp

Looks like there is an HMRC website to ask questions:

Community.hmrc.gov.uk 

Home>Customer Forums> National Minimum Wage and National Living Wage

National Minimum Wage and National Living Wage
Do you have questions about the National Minimum Wage or National Living Wage? Find guidance, support and post your questions here.

Trixy

Savvy_Sue said:

Did a webinar on NMW recently. Buying extra holiday which reduces your salary below NMW - not allowed.

This is where we picked up on it too.

Trixy

kimwp said:

kimwp said:

NMW is an hourly rate. Presumably the holidays are bought at the same hourly rate as the employee is paid - if so, then the employee's wage per hour will be unchanged if they buy holiday. They will be paid less, but will work fewer hours.

Having said this, if you have influence over wages, it would be great if you could consider paying your employees a living wage rather than the legal minimum. (Obviously this might already be achieved if you are in an area where living costs are lower)

We were working our way to pay a living wage, however, with the large increase in NMW it totally wiped that gap out as we were unable to increase at that amount given the other rising costs of NI, energy etc.  We're a small company so we are struggling to give employees much more now.

Trixy

kimwp said:

Looks like there is an HMRC website to ask questions:

Community.hmrc.gov.uk 

Home>Customer Forums> National Minimum Wage and National Living Wage

National Minimum Wage and National Living Wage
Do you have questions about the National Minimum Wage or National Living Wage? Find guidance, support and post your questions here.

Yes, I posted a question earlier in the week when another member posted the same page.

Trixy

Thanks everyone for your help/guidance.

It does look like it would fall under salary sacrifice but waiting on HMRC confirming or not!

Jimjones75

Trixy said:

Thanks everyone for your help/guidance.

It does look like it would fall under salary sacrifice but waiting on HMRC confirming or not!

Hi Trixy, Did you get a response from HMRC in regards to this we are in a similiar position 

missphisto

Im absolutely LIVID about this. 16yrs NHS service, being awarded pathetic pay rises etc and now they have denied us buying extra annual leave because our PALTRY wages will be below NMW 😡. My wage, my money why can I not do with it what I want ? My hourly rate is not changed, my salary is not changed, my choice if I want to use it to buy extra annual leave, surely? Apparently not. Wonder what the rule makers would have to say if they were dictated to as to what they could spend their wages on ? I find this wholly discriminatory against us on the  lowest pay. Just another slap in the face. 😡😠😡 and before anyone mentions unpaid leave.....spreading the cost of extra leave when your on the lowest wage is preferable to losing it all in one fell swoop.